A group of San Antonio cardiologists that was part of the ownership of the former Texsan Heart Hospital has sued its former corporate partners over a deal that preceded last year's sale of the facility.

S.A.H.H. Hospital Management LLC, the doctor group, seeks almost $10 million in damages from companies connected with MedCath Corp., a one-time hospital owner and operator that's been winding down its affairs.

The lawsuit was moved this month to federal court in San Antonio after originally being filed in September in Bexar County District Court.

Neel Lane, a San Antonio lawyer representing MedCath, declined to comment on the complaint. But MedCath previously issued a statement saying it would “vigorously defend” the lawsuit.

Dr. Charles Rabinowitz, one of the officers of the doctor group, declined to comment. Lawyers for the doctors couldn't be reached Wednesday.

Methodist Healthcare System bought the 120-bed hospital from MedCath in January 2011 in a transaction valued at $78.5 million, plus some working capital. The hospital is now known as Methodist Texsan Hospital.

Prior to the sale, MedCath exercised its rights to buy out the doctor group's interest. It's that transaction that triggered the lawsuit.

The doctor group, which held a 39 percent stake in the partnership that owned the hospital, alleges that it was “fraudulently induced” to enter into the Dec. 3, 2010, buyout.

Twenty days after the buyout, according to the lawsuit, MedCath informed the doctor group that the company was being investigated as part of a Justice Department inquiry into whether hospitals improperly billed Medicare for implantable cardiac defibrillators.

MedCath told the doctor group it would withhold an “extra $8 million” out of the proceeds of the Methodist sale for liabilities that could be incurred from the investigation. That included $3.2 million in patient payments that were supposed to go to the doctors, the lawsuit says.

The doctors claim MedCath isn't permitted to withhold those payments, so they are suing for at least that amount in actual damages.

The lawsuit also seeks $6.6 million in punitive damages for MedCath's “knowing and/or reckless conduct.”

This week, MedCath announced that it extended an agreement that suspends the statute of limitations for allegations related to the Justice Department investigation. The agreement now expires April 30.

Texsan Heart Hospital was built at a cost of $65 million and opened in 2004.

Prior to the opening, the lawsuit says, MedCath told the doctors that they'd make a profit if they performed 300 operations a year. The physicians performed more than 500 a year, but they never saw any profits, the lawsuit adds.

MedCath ran the hospital, “albeit poorly,” the lawsuit says. “In short, the hospital never made any money.”

About 70 physician investors were part of the hospital ownership group, the San Antonio Express-News reported last year.

MedCath partnered with physicians in owning about 10 hospitals around the country. But financial difficulties and changes brought on by the health care reform law prompted MedCath to sell the hospitals.